Partners feel the pinch as carry falls

Senior staff are being squeezed by a shrinking bonus pot and fewer opportunities to move on

By

Claire Coe Smith

Updated: February 17, 2010 4:52 pm GMT

Partners in private equity firms worldwide have seen their compensation levels fall in the past 12 months as distributions of carried interest – the share of profits from investments paid to employees once a certain level of return has been achieved – have fallen significantly with the scarcity of exits, industry analysts believe.

Private equity professionals, particularly in the higher echelons of a firm, traditionally rely on carry to supplement their salaries. But in order for carry to be paid out, a return "hurdle"...